tag:blogger.com,1999:blog-5713178645208582139.post8148481391605087941..comments2018-02-16T00:31:33.652-06:00Comments on Macro Musings Blog: Why the Global Shortage of Safe Assets MattersDavid Beckworthhttp://www.blogger.com/profile/04577612979801459194noreply@blogger.comBlogger18125tag:blogger.com,1999:blog-5713178645208582139.post-26970415555663079552011-12-31T07:06:13.035-06:002011-12-31T07:06:13.035-06:00hope I don&#39;t dumb down your conversation .. bu...hope I don&#39;t dumb down your conversation .. but I enjoyed the banter<br />~<br />shortage = tsunami - where a push/pull creates a temporary void that will refill quietly or violently<br />~<br />the Clinton/Bush push/pull banter has my mind spinning<br />~<br />best wishes to all surviving the push/pull in 2012<br />~<br />Anonymous aka Greg0658Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-45478141502551940652011-12-30T17:56:50.723-06:002011-12-30T17:56:50.723-06:00hmmm...in fiscal 2011, US treasuries attracted $3....hmmm...in fiscal 2011, US treasuries attracted $3.04 for each dollar of the $2.135 trillion in notes and bonds sold, the most since the the first release of that data in 1992; would one consider that shortage, or just excessive demand?rjshttps://www.blogger.com/profile/15681812432224138582noreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-79104751632473080962011-12-30T17:22:45.945-06:002011-12-30T17:22:45.945-06:00Christmas and all, I never had a chance to get bac...Christmas and all, I never had a chance to get back to this conversation.<br /><br />Perhaps the term &quot;shortage&quot; needs to be defined.<br /><br />David: &quot;But this does not imply that the equilibrium price cannot be such that the asset in short supply trades at a liquidity premium.&quot;<br /><br />I don&#39;t disagree with that. But nevertheless, if some sort of liquidity premium JP Koninghttps://www.blogger.com/profile/02559687323828006535noreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-11637447561309145672011-12-26T15:30:41.971-06:002011-12-26T15:30:41.971-06:00JP Koning,
What David Andolfatto said. I got the ...JP Koning,<br /><br />What David Andolfatto said. I got the the Triffin idea from the above FT Alphaville post and ran with it.David Beckworthhttps://www.blogger.com/profile/04577612979801459194noreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-91117285108301142372011-12-26T15:22:17.785-06:002011-12-26T15:22:17.785-06:00Steve Roth and Bozhidar, thanks for the links.
OG...Steve Roth and Bozhidar, thanks for the links.<br /><br />OGT, yes, I think the low rates around the world can be attributed in part to structural demand for safe assets. And I would add one more thing to the list of factors affecting the structural demand: demographics. The aging populations around the world are shifting their portfolios into fixed income as they retire and they too want safe David Beckworthhttps://www.blogger.com/profile/04577612979801459194noreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-53733531279889273102011-12-26T12:23:11.904-06:002011-12-26T12:23:11.904-06:00JP Koning:
I thought I set you straight on this. ...JP Koning:<br /><br />I thought I set you straight on this. ;)<br /><br />What is in short supply is commitment. (You are no doubt prepared to argue that the price of commitment will rise to frustrate the shortage.)<br /><br />A lack of commitment gives rise to a demand for collateral. You are right that there is no shortage in the sense of supply equals demand. But this does not imply that the David Andolfattohttps://www.blogger.com/profile/12138572028306561024noreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-64216343070035955882011-12-26T11:48:26.596-06:002011-12-26T11:48:26.596-06:00You got the Triffin idea from Pozsar, right?
I ju...You got the Triffin idea from Pozsar, right?<br /><br />I just don&#39;t think this can be a real issue. If the quantity of &quot;safe assets&quot; somehow collapses, then the prices of remaining &quot;safe assets&quot; will rise to meet the market&#39;s demand for safe collateral and stores of value. You can&#39;t have shortages in financial markets. Do you think you can?JP Koninghttps://www.blogger.com/profile/02559687323828006535noreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-21789053431853369662011-12-24T22:24:32.832-06:002011-12-24T22:24:32.832-06:00Would its be correct to read the structural elemen...Would its be correct to read the structural element of this being related to the twenty year slide in real interest rates in nearly all of the developed world?<br /><br />I have also been describing something like the Triffen dilemma as &quot;reserve currency Dutch disease.&quot;. The idea being that demand for reserve currency financial assets has a similar distortion effect on the economy as a OGTnoreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-25691271680259428942011-12-24T12:44:21.944-06:002011-12-24T12:44:21.944-06:00Forgot the link: www.imf.org/external/pubs/ft/wp/2...Forgot the link: www.imf.org/external/pubs/ft/wp/2011/wp11190.pdfBozhidarnoreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-60951895098823194282011-12-24T05:47:39.699-06:002011-12-24T05:47:39.699-06:00I suggest this paper on institutional cash flows a...I suggest this paper on institutional cash flows and the triffin dilemma in the us banking sector. Very relevant read on this topic. Great post, I am very interesting in the decline of safe assets.Bozhidarnoreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-38852983675124921402011-12-23T20:27:46.622-06:002011-12-23T20:27:46.622-06:00This is a terrible paragraph:
The structural dimen...This is a terrible paragraph:<br />The structural dimension is that global economic growth over the past few decades has outpaced the capacity of the world economy to produce truly safe assets. Ricardo Caballero, the author of this view, argues that it probably started with the collapse of Japaneses assets in the early 1990s, was exacerbated by emerging market crises throughout the 1990s, Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-29928989317714717332011-12-21T18:19:25.405-06:002011-12-21T18:19:25.405-06:00I found this Randall Wray insight darned interesti...I found this Randall Wray insight darned interesting, investigated it a bit.<br /><br />http://www.asymptosis.com/does-reducing-the-federal-debt-cause-financial-collapse.htmlSteve Rothhttps://www.blogger.com/profile/11895481216028771016noreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-1372424130972044482011-12-20T22:42:37.614-06:002011-12-20T22:42:37.614-06:00Superb blogging.Superb blogging.Benjaminhttps://www.blogger.com/profile/14001038338873263877noreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-48993130392392317252011-12-20T11:01:44.140-06:002011-12-20T11:01:44.140-06:00rjs,
I remember some commentators making that poi...rjs,<br /><br />I remember some commentators making that point back in the early 2000s. It would have been interesting to have seen, though, what would have happened had the debt been paid down. Would structured finance made even more AAA-securities to compensate? Would interest rates been lower back then too?David Beckworthhttps://www.blogger.com/profile/04577612979801459194noreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-91518491705580320932011-12-20T10:58:41.867-06:002011-12-20T10:58:41.867-06:00David and Nick,
Consider this post my attempt to ...David and Nick,<br /><br />Consider this post my attempt to blend the insights of New Monetarism with Market Monetarism.David Beckworthhttps://www.blogger.com/profile/04577612979801459194noreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-77264755541863540142011-12-20T08:22:36.043-06:002011-12-20T08:22:36.043-06:00this fits in with something i&#39;ve been trying e...this fits in with something i&#39;ve been trying explain in comments elsewhere...<br /><br />as i&#39;ve understood it, when it became clear to george bush that if clinton surpluses continued &amp; our debt was paid down, the financial system would soon experience a dearth of safe assets &amp; would freeze up; so his adminstrations tax cuts were initiated in order to keep levels of AAA assets rjshttps://www.blogger.com/profile/15681812432224138582noreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-44650031797401099562011-12-19T22:42:35.863-06:002011-12-19T22:42:35.863-06:00David A. Yep. Me neither on the Triffin dilemma.David A. Yep. Me neither on the Triffin dilemma.Nick Rowehttps://www.blogger.com/profile/04982579343160429422noreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-27649217257987225012011-12-19T21:05:07.486-06:002011-12-19T21:05:07.486-06:00Excellent post, David. I was not aware of Triffin,...Excellent post, David. I was not aware of Triffin, or aware of the Triffin dilemma, prior to this. Seems like I have some reading to do...David Andolfattohttps://www.blogger.com/profile/12138572028306561024noreply@blogger.com